The new edition of the report “Tax Statistics in Latin America and the Caribbean 2025,” prepared by the OECD in collaboration with regional and international organizations, provides a comprehensive overview of the evolution of tax systems in 27 countries in the region. With harmonized and comparable data, the document is key to understanding the role of tax policy in a context of low growth, high informality, and persistent social pressures.
Lower tax revenue after the post-pandemic rebound
The most relevant data in the report is that the average tax burden in Latin America and the Caribbean (LAC) fell by 0.2 percentage points in 2023, standing at 21.3% of GDP. It’s a decline after two consecutive years of increases following the COVID-19 crisis.
This decline is primarily due to the contraction in income tax revenue, occurring in the context of slower economic growth and falling prices for non-renewable natural resources. Countries such as Chile and Peru suffered significant declines of 3.2 and 2.1 percentage points, respectively, in their revenue as a share of GDP.
Marked regional differences
The report breaks down the situation by subregion:
- South America was the most affected, with an average decline of 0.5 percentage points, particularly influenced by lower prices for copper, lithium, and hydrocarbons.
- Central America and Mexico also declined by 0.2 percentage points to 19.0% of GDP.
- In contrast, the Caribbean improved its revenue by 0.3 p.p., reaching an average of 21.9%.
Brazil and Guyana, at opposite ends of the spectrum
In 2023, the highest tax burden was in Brazil (32.0%), followed by Jamaica (29.0%) and Barbados (28.1%). At the other end of the spectrum were Guyana (11.6%), Panama (11.9%), and Guatemala (14.0%). It is worth noting that all countries in the region have tax burdens below the OECD average (33.9%).
Which taxes weigh most heavily in the region?
The study shows that the tax structure in LAC remains highly concentrated on consumption taxes, which account for almost 50% of total revenue, with VAT being the most significant component (28.5%). In contrast, in the OECD, this proportion is 31.5%.
Income and profit taxes account for 29.6% of the total (18.4% corporate tax and 9.2% personal income tax), well below the OECD averages (12% and 23.6% respectively).
Social security contributions (CSS), meanwhile, account for 16.6% of the total, also below the OECD average (24.8%).
Non-tax revenues and natural resources: worrying trends
For the first time, the report includes a section on non-tax revenues, which accounted for an average of 3.1% of the region’s GDP (excluding OECD members). These resources, which include sales of goods and services and property income, are volatile, and their weight has declined in recent years.
There has been a sustained decline in tax revenues from non-renewable natural resources (such as oil and mining). In 2023, hydrocarbon revenues fell to 3.9% of GDP (from 4.4% in 2022), and mining revenues fell from 0.74% to 0.59%. Projections for 2024 anticipate further declines.
Structural inequalities and limited scope for expansionary policies
The report warns that the region still faces high levels of poverty (27.3%) and extreme poverty (10.6%). In addition, debt interest expenditure rose to 12.2% of tax revenue in 2022, more than double the OECD average (4.8%).
This problem reduces the fiscal space for financing public policies and investments, highlighting the urgency of adopting structural tax reforms that increase the progressivity of the system, strengthen tax administration, and promote greater equity.
Towards a new fiscal pact in Latin America
The authors of the report emphasize that LAC needs to transition towards fairer, more efficient, and sustainable tax systems. This approach implies reducing dependence on regressive taxes such as VAT, increasing personal income tax collection, closing compliance gaps, and incorporating environmental considerations.
The transition to a low-carbon economy will also require coherent tax incentives and a redesign of tax frameworks, especially in oil- and mining-producing countries.
Ultimately, it is crucial to emphasize the significance of establishing enduring fiscal agreements that possess both political legitimacy and widespread public support. The technical foundation is in place. Now, the challenge is political.
Sources: OECD, CIAT, ECLAC, and IDB (2025), Tax Statistics in Latin America and the Caribbean 2025. Available here.